Forget Nvidia And Micron — The Iran War Just Created An Earnings Boom For US Refiners

The Iran war is likely to reshuffle the earnings landscape for Corporate America in 2026.

While Nvidia dominated 2024 and Micron Technology was among the leading performers of 2025, a sustained military conflict in the Middle East could trigger a windfall of an entirely different kind: a historic boom for America’s oil refiners.

• VanEck Oil Refiners ETF shares are testing new highs. Why is CRAK stock breaking out?

With WTI crude at $96 a barrel, diesel futures (ULSD) at $3.92 a gallon and gasoline futures (RBOB) at $2.90 a gallon, the refining margin — what the industry calls the 3-2-1 crack spread — is sitting near $40 a barrel.

That is roughly twice the normalized margins refiners enjoyed before the conflict escalated.

A Record Winning Streak For U.S. Oil Refiners

Even before the first strike on Feb. 28, U.S. refiners were already in a structurally favorable position. Global refining capacity had been declining for three consecutive years as European facilities closed and new build projects stalled due to capital cost and energy transition uncertainty.

The result: a tighter global refining system with less slack to absorb supply shocks — exactly the setup that makes an event like the Iran war a structural earnings accelerant rather than a temporary spike.

The VanEck Oil Refiners ETF (NYSE:CRAK) has rallied in each of the past 11 weeks — that’s the longest winning streak since the fund’s inception.

Since the start of the war has risen over 5%, while the S&P 500 — tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — is down about 2%.

The Crack Spread: How Refiner Profits Are Made

Refiners benefit from the spread: the gap between what crude costs and what refined products fetch. The 3-2-1 crack spread is the standard measure of refining profitability.

It represents the gross margin a refinery generates when it converts three barrels of crude oil into two barrels of gasoline and one barrel of diesel.

Here is the calculation according to current market prices:

• 2 barrels gasoline × $2.90/gal × 42 gal/bbl = +$243.60
• 1 barrel diesel × $3.92/gal × 42 gal/bbl= +$164.64
• 3 barrels WTI crude feedstock × $96/bbl= −$288

Therefore, the gross margin per three barrels processed amounts to $120.24 or about $40 per barrel.

The $240 Billion Windfall Wall Street Is Still Underpricing

The U.S. operates the largest refining complex in the world.

With 131 active refineries holding a combined capacity of approximately 18.4 million barrels per calendar day, the U.S. system is the critical backstop for global refined product supply — a role that has become dramatically more valuable as Middle Eastern refinery infrastructure faces disruption.

At an average historical utilization rate of around 89%, actual throughput runs closer to 16.4 million barrels per day. Annualized, that is approximately 5.98 billion barrels processed per year.

Multiply 5.98 billion barrels by a $40 crack spread, and the theoretical gross refining margin for the U.S. industry as a whole reaches nearly $240 billion per year — more than double the equivalent figure at pre-conflict normalized margins of around $18-20 per barrel.

That figure is not net income — operating costs, feedstock variability, maintenance and taxes all compress it — but it frames the size of the revenue wave flowing through the refining sector at current prices.

The Five Refiners That Capture the Crack Spread

Five publicly traded U.S. independent refiners offer investors the most direct exposure to the current refining margin boom — a market environment where crack spreads have surged toward $40 per barrel, levels rarely seen outside major supply disruptions.

Marathon Petroleum Corp. (NYSE:MPC) ran its refineries at approximately 95% utilization in the fourth quarter of 2025, with total throughput of just over three million barrels per day. Its R&M margin reached $18.65 per barrel — the best in the peer group — with refining operating costs of $5.70 per barrel.

At a $40 crack spread and 95% utilization, the implied gross refining margin on three million barrels per day — annualized — approaches $44 billion, before operating costs

Valero Energy Corp. (NYSE:VLO) processed about 3.1 million barrels per day in the fourth quarter, equivalent to roughly 285 million barrels refined during the quarter, the highest throughput among U.S. independent refiners. The refining margin per barrel surged to $13.61 in the fourth quarter of 2025.

Valero’s structural advantage in the current conflict environment is its distillate exposure: approximately 40% of output across its refinery network is diesel and other distillates, making it among the most diesel-leveraged name in large-cap U.S. refining.

At $40 per barrel and 3.1 million barrels per day, Valero’s annual gross refining margin run rate would exceed $45 billion.

PBF Energy Inc. (NYSE:PBF) represents the sector's highest-beta exposure to crack spreads. The company processes about 1 million barrels per day, equal to roughly 360 million barrels per year, and operates as a near pure-play refiner with minimal diversification outside refining.

That structure means PBF captures the crack spread almost directly. Its East Coast refining system — including Delaware City and Paulsboro — sits in the region currently experiencing the tightest diesel supply in the United States.

At $40 per barrel on roughly 889,000 barrels per day, the annualized gross margin run rate approaches $13 billion — versus a 2024 baseline where margins barely covered operating costs.

Phillips 66 (NYSE:PSX) is the operational efficiency leader of the group. The company ran at 99% crude capacity utilization in the fourth quarter of 2025 — the highest in the peer group — delivering a record clean product yield of 88% and a realized refining margin of $12.48 per barrel. Across its 10 refineries, total crude throughput capacity stands at 1.9 million barrels per day.

At a $40 crack spread, the implied annual gross refining margin runs to roughly $27.4 billion, against an $8.6 billion run rate at fourth quarter 2025’s realized margin of $12.48 per barrel.

The offset is diversification. Midstream and chemicals represent a growing and intentional share of PSX earnings, which dilutes pure crack spread leverage relative to MPC or PBF. Phillips 66 has raised its quarterly dividend for 14 consecutive years — a capital return profile that the wartime margin environment makes considerably easier to sustain.

HF Sinclair Corp. (NYSE:DINO) rounds out the group as the mid-cap play with a distinct geographic edge. The company achieved a record annual throughput of 652,000 barrels per day in 2025. Full-year adjusted refinery gross margin per produced barrel sold increased to $15.37 in 2025 from $10.43 in 2024, while operating cost per throughput barrel fell to a record $7.67 — the best cost discipline result in the peer group on a per-barrel basis.

At a $40 crack spread on 652,000 barrels per day of annual throughput, the implied gross refining margin runs to approximately $9.5 billion annually, against a $3.9 billion run rate at 2025’s realized margin.

The Rocky Mountain and Mid-Continent geography is the structural differentiator. Inland crude differentials — WTI Midland, WTI Cushing and regional sour grades — tend to widen during supply disruptions, compressing DINO’s feedstock costs and lifting net margins above the headline crack spread.

Photo: QQMinh88 via Shutterstock